Web conferencing will be taking on a new significance later this spring when Microsoft completes its announced acquisition of Mountain View, Calif.-based PlaceWare. Microsoft has said its
ultimate plan is to make the audio/visual application as commonplace as
e-mail or instant messaging is today.

Originally Microsoft began its Web conferencing path with NetMeeting, which developed into a conferencing service available through its Exchange servers. Now they are starting up a new Real Time Collaboration Group in which they will combine PlaceWare and its Greenwich instant messaging division.

PlaceWare CEO George Garrick sat down with internetnews.com to talk about the acquisition as well as the significance of Web conferencing to business and consumers. After taking the reigns of the company in May 2002, Garrick pledged to make the company profitable and take it public. He says being acquired by Microsoft was the last thing on his mind.

Q: How did PlaceWare and Microsoft come to this agreement? Talk about
the process.

We had no intention of being acquired. We were hoping to be one
of the first Silicon Valley companies to go public once the market warmed up
again. We had a whole line of bankers courting us for an IPO and that was
our stated objective -- to build the company and to be highly IPO-able.

If you have the right story, you can go public and bankers were telling
us that we were definitely one of the companies that could go public in '03.
We were waiting to get a little bigger and not have as much dilution.

That said, we also had to be willing to entertain opportunities that come
along that were not anticipated. In this case, this opportunity with
Microsoft came along. It was in the best interests of the company and
investors and even though we were not planning on it, it turned out to be a
good decision.

Q: Are the two companies compatible?

We think the cultures are very compatible. As we said on the day of the
announcement, we think that both companies share a common culture with
respect to being driven about technology, being passionate about technology,
believing in empowering individuals and being the leader and innovator in our
space.

Q: Some people are pointing to Web conferencing as the 'next killer
app'. What is your take on it?

I've been saying it all along. There are a bunch of reasons. It's a
natural evolution in the way people communicate. If you think about the
evolution of audio conferencing -- that has gotten more sophisticated. If
you think of how people have shared documents -- that has gone from mail to
Federal Express to fax and now e-mail. And the state-of-the-art for most
meetings is that people hook up with a conference call and then they flip
through their PCs over materials on that were sent around by whomever is
holding the meeting.

The next step in that progression is to bring those two streams
together -- the data and the audio into a virtual space.

By doing Web conferencing, in many ways you can find that the meeting is
so much more effective with people avoiding travel. The meeting itself is
much more efficient and there is a written record and it is very low cost.
People spend half of the time doing some type of collaboration either by
phone or in some type of meeting. So if you can make that more efficient,
you can benefit every worker.

Q: Are you still developing the platform?

We're always looking at ways of making our product better. In the next
few months we're introducing a new client interface that will be based on
native Windows rather than Java, which is what we use today. That was a
decision that we made some months ago even before Microsoft even contacted
us. It gives us a better functionality such as drop down menus and right
clicking. We are also working to do more to embed audio multimedia so that
you will be able to control the phone call right from the product.

Potentially the consumer area is one place I'd like to see it grow. It's
actually part of the company's original vision. A good example is joint
browsing of Web sites to let people go shopping together. Right now friends
get together and go to the mall. Well, why can't you do that over the
Internet? What you can do with PlaceWare is share a browser window and one
person controls it but everybody is looking at the same thing. The same
thing could happen if you are communicating with someone to go over
homework. There are a lot of personal uses, which I think will become very
popular. It's just a matter of time. The same way that people are using
e-mail and chat to talk to each other. The most obvious use is business. But
as people start to use the technology as routinely as other forms of
communication, then we'll realize how we can use it in our personal lives.

Q: What kind of adoption rate for Web conferencing are you seeing? Is
there a post-9/11 effect?

The 9/11 effect is way over blown. I'm sure at the time there was some
heightened sensitivity and we probably picked up some meetings that we
otherwise wouldn't have. But if you go back and look at our quarterly usage
trends -- even the trends of our competitors -- the rate of growth before
9/11 is the same after 9/11. It was growing aggressively anyhow.

That said, one of the things that companies like about it is that it is a
hosted service so there is not a capital expense, there is not a big outlay
that you have to make. All that it requires is a Web browser so there is not
a need for IT integration or technology testing.

Q: Is the competition in Web conferencing fierce?

We're in a business that grows between 70 and 80 percent a year, so
competition is just not an issue in this industry. We are not by far the
largest player -- WebEx is larger.
The majority of the time we are not competing.

Q: How do you differentiate yourself from the competition?

The military uses PlaceWare in the Middle East and they use it to connect
soldiers in the field with controllers up in the airplanes with people back
in the Pentagon.

Q: And they'll be connected by satellite?

We use existing Internet connections and phone lines. What happens behind
the scenes is irrelevant. For example, you'll have a general up in a like an
EC2 one of the big reconnaissance planes - sort of like a flying command
center -- and you'll have officer and field staff on the ground all they'll
all be using PlaceWare to coordinate battle plans and information on the
enemy. We've seen an increase in our business in the last few months as part
of the security issues overseas.

Q: Because you are the host of each session, are there legal issues
that you have to grapple with? Say criminals were using the service.

No, it's like being a phone company. We can't tell what the people are
using it for. The content is secured in the same way that a phone line or
e-mail is supposed to be secure. Secondly, even if we did I don't see how we
can play the role of determining what is O.K. and what is not. It's just not
a role that a communications company can do.

Q: Where will you be after the acquisition closes?
Until the deal closes, we will be operating as two separate companies. After
it closes, I can't say. I'll be transitioning on. I won't be there.

Q: Is that disappointing?

No, I've done my job in being able to evaluate the opportunities and
bring it to the board that everyone was happy with including the employees.
So, I just need to find another company to run.

Q: What will you do next?

Finding a company at a growth stage. I'm not a good fit for early-stage
start up.
My sweet spot is after the product has been proven, they've got some
momentum and they need to scale that.

Q: Are there still opportunities in the Silicon Valley?

Despite all the fallout, there are still lots and lots of good companies
coming along and there will continue to be. What's gone is the distraction.